Give me a pretty blond waving fans and dancing around a stage over looking at a greasy haired, swarthy, mustachioed magician any-day . She sends out knowing winks, and seductive smiles to the audience, all while wearing bright red lipstick and face it, you’re entranced, you’re watching her, and then voila! The trick is done before you realise it and the caped magician is receiving all the applause for making a rabbit appear out of someone’s nose.

And in the same way as the markets and the media have been distracted with the news, and subsequent execution, of the Greek bailout should everyone’s attention have been focused on Ireland and Portugal instead?

The Irish and Portugese problem is potentially worse, far worse, than the Greek crisis. To illustrate, lets quickly delve a bit further into how the Greek bailout evolved.

The Greek bailout was originally estimated to be around 70 billion euros. It will finish near 110 billion euros, but should, according to Goldman Sachs, be around 170 billion euros.

And who will pay for that? Well the headlines say that German’s and French will pay, but that is only half the story. 30 billion euros will come from the IMF. And there are no prizes for guessing who the biggest contributor to the IMF is. That’s right, the Americans. *Starts chanting USA! USA!*

And of course it’s thanks to debt markets, and appreciating interest rates that an extra 40 billion euros was added to the bailout size.

Below is a chart showing just how much each of the contributing nations will pay per household for the Greek bailout. Note the US contribution is via their IMF obligations.

Did you notice something about the countries contributing? Take another look. That’s right, every country in the ‘PIIGS’, except Greece of course, is helping Greece pay down its debt. Portugal, Ireland, Italy and Spain who are all struggling with debt obligations of their own have somehow stumped up cash for Greece. And those countries also have a relatively high chance of sovereign debt default, as seen below.

According to the Economist, it is rumored that Spain will soon be asking for 280 billion euros to help refinance it’s outstanding obligations (estimated at $225 billion). Ireland may soon need assistance with it’s own 80 billion euros of debt (which accounts for roughly 55% of it’s GDP) and Portugal too, may soon come down with a debt laden cold. It’s five year bonds have already risen to over 5%.

Chances of soverign default by European countries

Many will be asking ‘how did this come to pass?’ Valid question. How did it? Was is the banks that lent the money for development and projects? Was it the populace demanding higher living standards and job opportunities, or was it the politicians who were only thinking of the next election, not the next generation? Or, is everyone to blame, just a little bit?

Regardless of asking ‘how did this come to pass?’ those who do may be comforted, at least somewhat, to know that financial Armageddon would already be upon them if not for the Euro, which, incidentally is now a burden because these countries can’t deflate their currency.